Foreign investors flock to Spain as market looks set to take off

SPAIN has become a magnet for global bargain hunters, as experts predict the real estate market is about to rocket.

Prices are down as much as 50% from their peak, and investors from all over the world are flocking to Spain to take advantage of the opportunity.

Investments from big-name international companies are driving the market, with Goldman Sachs and Blackstone buying apartments in Madrid, and Paulson & Company and George Soros investing in a Spanish real estate investment vehicle.

Fernando Acuna, of start-up real estate advisory firm Aura, said: “It’s crazy the number of investments coming in. I think 2014 is the year we will see a lot of transactions.”

Just over €5 billion worth of real estate transactions took place last year, according to the consulting firm CBRE Spain – more than double the amount of 2012.

At the onset of the crisis, it was predicted it would take Spain 10 years to recover.

But just five years on, many are starting to voice concerns that the competition to invest in some assets is driving prices higher.

“People are starting to overpay on certain assets,” said an investment banker who wished to remain anonymous. “There’s lots of pressure from investment committees in London to do deals.”

About Imogen Calderwood

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13 COMMENTS

Good news, but let us hope it’s not the start of a long boom and bust cycle again. Also, recovery is not just about property purchases. The dire youth employment issue has yet to be rectified, and without that solved can the government really say that Spain has “recovered”?

Spain now needs to get on top of planning laws, legalise/regularise all the properties it can, and properly compensate people who purchased in good faith but who now find themselves in legal limbo. It seems some in the government are now listening, which goes to show that being vociferous on these issues does make a difference.

‘Global bargain hunters’. This HAS been happening for a long time where we visit at the coast, like I’ve said before. It’s just that mention anything about SELLING HOUSES in Spain one here you get a tirade of the usual Spain bashers saying it’s all just doom.

Now you get one of the whiney leaders, FRED, on here saying ‘Good news’.

As the owner of two 3-bedroom apartments in Granada, which I bought in late 2010 for €110,000 each but which are now worth about €70,000, I sincerely hope the author of this article is correct about an upcoming surge in price. But I only got to this article after accidentally landing on an article from this same journal in January 2013 stating with equal certainty that home prices were set to PLUNGE a further 50%.
Sorry, but as much as I appreciate this journal, I am NOT convinced either way. Prices have supposed stabilised, which is a good thing. But still not many people are buying outside here in Granada (40 minute drive to nearest beach).
Remember, if the eurozone implodes (extrogenous factors: Scottish independence vote, Catalogna, Ukraine, rise of far-right parties, etc.), Spain and other countries will return to their legacy currencies.
Oh, you say that such a move could not happen overnight? True, but the market will price in future changes on the eurozone immediately. Even anticipation of the eurozone’s end will meean an instantaneous contraction of 30% (at least) in Spanish property prices, according to financal analysts!

Good point Victor. Property prices would go into freefall without the extremely limited protection of E.U. regulation.
Who would have any confidence at all in ownership of Spanish property after, or even the threat of, dissolution of the free market ?

I would like to address Stefanjo’s kind reply to me as well as Steve’s question about squatters.
We agree, Stefanjo, about the dire consequences for home owners, should the eurozone implode or Spain leave it. Not at all farfetched these days.
On the plus side, the ECB (central bank) has just adopted a series of radical measures to encourage banks to stop parking their money in the ECB’s overnight window and start lending to individuals and businesses of the real economy. That is great news for anyone in a position to buy a property, although even these measures will no, by themselves, resolves the nagging problem of totally depressed demand.
But the ridiculously low interest rates on sovereign debt of up to 4 years maturity means an instantaneous slashing of the peripheral governments’ monthly debt financing costs and thus a tremendous easing of their fiscal budgets. Remember, budget would have zero deficit if not for the debt financing costs.
So last Thursday’s ECB meeting has brought genuine HOPE to the Spanish job and thus property market. We shall see …

Steve, I just read an article by a Spanish lawyer (in Spanish) where he explains that the recent changes in legislation do not really help property owners kick out tenants any faster than prior to the new law. This is a scary situation for all property owners. I have asked my estate agent to write a far more stringent contrat to protect my rights, but we are operating in a totally volatile legal climate. Here is the article: “http://blog.enalquiler.com/2014/desahucio-express/hay-desahucio-express/”

Now that Brit pensioners are able to take their “pension pot” in one lump sum, rather than being forced to purchase a (derisory) annuity. It throws up a huge opportunity for the Spanish property market. Some people have built up significant sums and would be happy to “buy to let” if they could be sure of the protection of law. For lack of the will to reform the idiotic property regulations, Spain is missing out on a great chance to rake in loads of money. Again…..

Exactly my point Reap.If the clowns who run things got their act together and stopped placating the hotel lobby with restrictive regs. on holiday lets (not long-term ones) then there would be opportunities for everyone. This type of short-term arrangement suits owners (as a holiday home) punters who hate hotels, and bars and shops who love money. The tax-man too!
These pension pots becoming available means many people don’t have to give up their Blighty home. They can keep it as a fall-back and not need to worry about negative equity on the Spanish property. Their Brit property would probably increase in value to off-set possible losses in Spain.
As Buddy Holly said, “That’ll Be The Day”.

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